BoC is widely expected to keep interest rate unchanged at 5.00% today and the main focus is whether Governor Tiff Macklem would start to change the tune to lay down the groundwork for a June rate cut. With new economic projections on the table, this meeting presents an opportune moment for such indications.
A recent Reuters poll revealed a consensus among economists, with 27 out of 38 forecasting a 25 bps cut by BoC in June. Meanwhile, 7 expected the cut in July and 4 in September. By the year’s end, the expectation is for a 100 bps cumulative reduction, bringing the rate down to 4.00%.
Despite these anticipations, a noteworthy portion of economists — 13 out of 16 — who responded to an additional query, suggested that the timing of the first rate cut is more likely to be delayed than they expected. Moreover, 11 of them believe there’s a heightened risk of fewer rate cuts than initially forecasted.
While USD/CAD’s rebound from 1.3176 has persisted in the last few months, momentum is clearly lacking as seen in both the structure of the rise, as well as in D MACD. Break of 1.3477 support the first signal that such rebound has completed as a corrective move. Nevertheless, firm break of the upper channel line will likely prompt upside acceleration towards 1.3897 resistance. Today’s BoC decision is poised to significantly influence the currency’s next move.
